What is a credit history?
But isn't it better to use cash rather than borrow money?
Why is a credit history so important in The United States?
Did you know?

What is a credit history?

A credit history is a record of how you have used credit in the past. It is used to determine the likelihood that you will pay your bills if you are given a loan. A credit history is not something that you apply to create; it is created automatically for you when people that you formally borrow money from report your payments to a credit bureau.

 

But isn’t it better to use cash rather than borrow money?

Unlike many countries, where borrowing money and debt may be viewed negatively, in the United States demonstrating that you can responsibly handle debt puts you in the best position to achieve your financial dreams. By building a positive credit history you will have access to many sources of credit with lower interest rates and favorable terms, saving you money!

 

Why is a credit history so important in the United States?

Did you know that in the United States your credit history is used for much more than to get a loan?  Landlords, insurance companies, cell phone companies, mortgage lenders and many employers check credit records. All of these parties examine how well you manage your money to determine how well you manage other areas of your life. If you frequently make late payments on your loans, a potential employer might think that this could mean that you will be late in meeting important work deadlines.

 

Did you know?

Opening a bank account and paying your bills for rent, phone, electricity, water and cable on time does not help you to build a credit history!
However...If you make late payments on any of your bills for these items your late payments will be recorded in your credit history.
Why?  Because your payment history is one of the three factors used by creditors to determine whether or not to give you a loan.

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